Tennessee’s tax-friendly reputation makes it one of the best states for retirees looking to reduce their tax burden, according to a report by Kiplinger.com.
“The Volunteer State is a very tax-friendly state. Tennessee has no broad-based income tax, so salaries, wages, Social Security benefits, IRA distributions and pension income are not taxed. But the state does levy a 6 percent tax on stock dividends and interest income from bonds and other investments,” the report says.
My wife, Cheryl, and I are not ready to retire, but paying no state income tax was one of the reasons we moved to Knoxville from Southern California a few years ago. We have a lot of friends and family in California, but we don’t miss the high taxes.
The Kiplinger report says this about California taxes:
“The Golden State is a retiree’s tax nightmare. Although Social Security benefits are exempt, all other forms of retirement income are fully taxed. With a top rate of 10.55% (on taxable income of more than $1 million), California residents pay some of the highest income taxes in the U.S.
Check out Kiplinger’s report and an interactive map — Retiree Tax Heavens (and Hells).
Photo: Associated Press